President Barack Obama and top lawmakers met in a last-ditch attempt to craft a budget deal before the "fiscal cliff" - tax hikes and spending cuts that could send the country into recession - starts to kick in on January 1.

Sal Masionis, stockbroker at Brant Securities, said the negotiations pulled the index lower.

"Obviously there's not going to be any major resolution," he said. "They will try to make some kind of a small dent in the problem."

After that, Masionis added, the U.S. federal debt limit will be a major problem.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 57.65 points, or 0.47 percent, at 12,316.12. It edged down 0.6 percent for the week.

"The volumes are quite low, and if you combine that with the short-term uncertainty of the 'fiscal cliff' in the United States it's a real recipe for a downward market," said Arthur Salzer, chief executive of Northland Wealth Management.

The materials sector, home to miners, pulled the market lower, led by gold stocks as the price of gold fell. The sector slid 0.8 percent.
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